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FG extends waiver of 35% on imported used vehicles to December

By BusinessNews Staff on July 4, 2014

The production of Peugeot 301 cars began in Nigeria yesterday following the take-off ceremony performed by Vice-President Namadi Sambo at Pan Nigeria factory at Kakuri in Kaduna State.
Also inaugurated was a proposed site for automotive components cluster park at the premises of Pan Nigeria Limited.

Sambo said the take-off of the production was vital to PAN and to the Nigerian automotive industry in particular, adding that “The decline of PAN and, correspondingly, that of the suppliers is a story of Nigeria’s industrial sector in the last three decades.”

Sambo, represented by the Minister of Industry, Trade and Investment, Mr. Olusegun Aganga, said President Goodluck Jonathan was determined to turn the fortunes of the sector around.
He said it was impossible for any nation to move from poor to rich by exporting raw materials alone, “as we have done in decades, without having a strong industrial and servicing sector.”

According to him, the exportation of raw materials translated into the exportation of jobs, stating that “for decades Nigeria has exported oil and gas but this has not made Nigeria rich and will not make Nigeria rich. What will make Nigeria rich is what Nigeria does with its agricultural commodities, its 44 solid minerals in commercial quantity, it crude oil and its gas.”
He said this was the reason industrialisation was important, and that this led the president to launch the industrial revolution pact in February, this year.

The plan, he said has four main features: “It identifies where Nigeria has competitive and comparative advantage; where Nigeria can be number one in Africa and the top-10 player. Those sectors include the automotive industry, textile industry. These are the two big industries in Kaduna State.”

Sambo said for these sectors to succeed, there must be affordable financing in the country, improvement in skills, saying the president’s aspiration was not only to assemble cars in Nigeria.
He said the plan included the improvement of local content, moving from iron ore to steel, from gas to plastic, from rubber to tyres.

The establishment of the components’ park, he said, was part of the plan and congratulated PAN for taking the initiative.

He said the automotive policy and other sectoral policies would be backed by law before the end of the administration, as directed by the president.
The automotive sector, he said, had been identified as a strategic industry group due to its large domestic market, strong industrial linkages, existing installed base and export potential to ECOWAS states and to other African countries.

He said the only country in Africa that has done more than Nigeria in the automotive sector was South Africa and that in that country, the automotive industry was the second largest employer of labour in the manufacturing sector.

The automotive sector, he said accounted for about 12 per cent of their export and accounted for about four or five per cent of their GDP, adding that was how big the industry could become in Nigeria, particularly with its population of over 170 million people.
The federal government, he said established the Nigeria automotive industry development plan to transform the nation’s automotive industry and attract investments into the sector.

In respect to skills acquisition, he said the government was working with the Nigeria Universities Commission to have Automotive Engineering in the curricula of universities, stating that “three universities, University of Ibadan, Tafawa Balewa University in Bauchi, and Elezade University are already offering this programme to produce automotive engineers to support this industry.”
He said international standards would be maintained in the production process to ensure global competiveness, saying that the Standards Organisation of Nigeria was already working on the standards required in the auto industry.
The chairman of PAN Nigeria, Alhaji Munir Ja’afar said PAN has dedicated the local parts park as its contribution to the automotive cluster parks in the National Automotive Development Plan on 2013.
Ja’ afar said: “We the industrialists have wholeheartedly agreed that the policies are meant to explore growth opportunities, increase our GDP and create employment for our citizens.

“We therefore call on the federal government to jealously monitor the implementation of the policy and avoid policy flip flop, as this is capable of dampening our moral and confidence.”

He said the Federal Executive Council (FEC) should follow its directive with political will and, to compel ministries and government agencies to patronise made-in-Nigeria vehicles, as this was the only way the government could create market for the locally produced vehicles, “in addition to duty differentials recently introduced to encourage local production.”

According to the Managing Director of PAN Nigeria, Ibrahim Boyi, the automotive policy made it possible for them to reopen the industrial production of Peugeot vehicles after six years of inactivity.

The policy, he said, also attracted the full support of their partners, Messrs. Automobile Peugeot of France and created a window of opportunity for potential employment and re-engagement of their disengaged workers and it would also resuscitate the business of the largely moribund local component manufacturers.

He said: “Our auto manufacturing plant remains the biggest and most comprehensive auto plant not only in Nigeria but also in West and Central Africa. Our will be the benchmark for all incoming auto plants in Nigeria.”

Meanwhile, as the Nigerian Automotive Industry Development Plan (NAIDP) took effect from Tuesday, the federal government has said it would take until December this year for the 35 per cent waiver on imported vehicles to take effect.

Also extended to December is the introduction of a nationwide automotive credit purchase scheme and attainment of the critical capacity by local assembly plants/new investors to meet estimated national demand.
Aganga approved the extension by invoking “a provision in the circular No. BD/FP/DO/09/1/224 of 29 February 2014, as provided for the ministry/NAC to extend the waiver of only 35 per cent levy on used vehicle import from July 1, 2014 to December 31, 2014 in order to manage market conditions.”
The extension was contained in a statement issued and signed by the Director General, National Automotive Council, Aminu Jala, who said his statement was to confirm the full implementation of the NAIDP.

The DG said: “The implementation of all other aspects of NAIDP remain in force, as the policy is not all about tariff on used vehicles only.”

He said: “Those who engage in local value-added would continue to import new fully built vehicles twice the number they assemble without levy as well. SKD2 kits (semi knocked down) they import at the easiest level of assembly will attract 10 per cent tariff, SKD 1 kits imported at a slightly higher level of assembly will attract five per cent tariff and the CKD kits (completely knock down) will attract zero per cent duty.”

He said his organisation was hopeful that by January 1, 2015, the local assembly plants would have developed sufficient combined capacity to supply affordable vehicles that would meet national demand.
He said by that time, the new automotive credit purchase scheme should have come on stream in order to enhance the capacity of Nigerians, who may otherwise buy used vehicles to now acquire new ones on convenient payment terms.
According to him, “A payment spread over four to five years at single digit interest rate is anticipated.”

[This Day]

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